In 2009, approximately 40 million patients will undergo more than 50 million outpatient procedures in the U.S., including nearly 25 million procedures among the elderly. Since the mid 1990's, the volume of these minor, but very common, procedures has increased by nearly 70%. Responding to this demand as well as a concurrent decline in the need for hospitalization after surgery, the number of freestanding ambulatory surgery centers (ASCs) has more than doubled over the last decade to more than 5000 facilities nationwide. The primary advantage of ASCs is their superior efficiency, which is achieved by increasing productivity and reducing the costs of the surgical episode (i.e., per case). However, ASCs tend to be owned by the specialists who staff them, contributing to the possibility of induced-demand. Proponents of ownership argue that such relationships centralize surgical care and increase physician administrative control- both of which may improve efficiency and quality. Critics point out that misaligned incentives (i.e., financial vs. patient interests) may result in overutilization of services and possibly greater overall costs. More recent trends in single-specialty ASC proliferation amplify this concern to the extent that these facilities are owned by a smaller number of physicians, for whom the incentives are stronger and more direct. In this context, savings accrued through lower surgical episode costs may be offset by greater overall utilization. To examine this issue more carefully, this grant has the following three aims. Aim 1: To characterize the delivery of outpatient surgery in the United States. Using national Medicare data, longitudinal trends in regional variation in delivery systems will be examined. The proposal will focus in particular on single-specialty ASCs and their relative dissemination across specialties and procedure types. Aim 2: To determine the impact of regional delivery systems on procedure use. The effect of market-level ASC penetration on population-based rates of outpatient surgery, both overall and for the most common procedures groups, will be measured. Aim 3: To assess relationships between regional delivery systems and Medicare payments. Using similar methods, the effect of market-level ASC penetration on national Medicare expenditures will be determined. The proposed research fits within AHRQ's value portfolio, clarifying the extent to which the proliferation of ASCs, and single-specialty facilities in particular, is helping or hurting the efficiency of outpatient surgical specialty care. Further, the application indirectly informs the policy debate surrounding physician ownership, utilization, and health care costs. PUBLIC HEALTH RELEVANCE: This application will use national Medicare data to evaluate the extent to which evolving delivery systems are fueling the growth of outpatient surgery. Understanding the relative efficiency of care provided by specialists in single- versus multispecialty ambulatory surgery centers is of immediate interest to payers and policymakers. In particular, findings from this study have potential relevance to several important policy initiatives, including anti-self-referral legislation and payment reform for surgical care.